How Cash Only Spending Saves Money

One easy method that has helped me save money is cash only spending. I used to never carry cash and used my debit card for most of my purchases.

Using my debit card was a double-edged sword. I was happy because I wasn't paying with a credit card. But my debit card was also hurting me because I would overspend at the grocery store and restaurants.

I decided to experiment and see what would happen if I only used cash.

When to use the cash-only spending method

I am primarily an online spender. I pay all my bills online, use Amazon for most of my household purchases and even order my pet food online.

I rely on my Starbucks app for my weekly coffee splurge.

I decided to use cash only spending for my regular, everyday type of purchases. This includes the grocery store, dining out and other fun money splurges.

I am a planner and pretty routine, so I don't have very many unexpected purchases.

Cash only spending has definitely been the most effective for me when it comes to dining out. Dining out has been a problem area for me. By giving myself a monthly cash budget, I have really had to plan where I want to eat and how much I can spend.

Here are some tips on how cash only spending saves money

Withdrawal cash only when you get paid – I get paid from the day job every other week on Friday, so I try to take cash out the same day. This helps for budgeting purposes and to make sure I have enough cash flow!

Plan how much cash you really need ahead of time – I always refer to my monthly budget and check to see what upcoming expenses I have planned, like groceries or household items. I have a $50 grocery budget I stick to each week, so I know I need $100 in cash for groceries to get me through two weeks.

Conscious spending – I am very aware of how much cash I have in my wallet at any given time. I don't want to run out of cash, so I spend more time contemplating each purchase that I make. Whenever I am tempted to throw in a couple extra items into the shopping cart, I think about how much cash I have and if the purchase is worth it. This really helps me stick to my budget!

Seek out the savings – Whenever I used to meet up with a friend for a drink, the drink prices were not always on the menu. I would totally disregard drink prices and just slap my debit card down when the bill came. Now thanks to apps like Cocktail Compass, my girlfriends and I plan ahead and look for happy hour pricing and dining specials.

After using the cash-only method, I have a whole new mentality on spending! By using the mind set that I can only use the cash that is in my wallet, I have really curbed my extra spending habits.

Do you pay with cash?

12 Comments

Yes, for food and small fun purchases. It’s totally changed the way I think about this stuff! I estimate I’m saving around $50 a month, although I don’t really know because I switched to cash at the same time I started tracking. I do know I used to routinely pay $60-80 at the grocery store every week and now I pay more like $40-60.

Kristin
on January 27, 2015 at 10:06 am

It totally makes a difference on spending for food and fun money! That’s a nice little chunk of change to save at the grocery store!

I typically do not pay with cash, but I do think it seems to help people spend within their means. And if it works, why not? I just don’t like the hassle of carrying a bunch of cash around.

Kristin
on January 27, 2015 at 10:08 am

It was a major effort to get cash out at the bank, I don’t know why though, my bank is 2 blocks from me 🙂 It was a major brain change for me to get used to having cash on me as I have always relied on my debit card.

I use debit which is somewhat helpful when money is tight over using my credit cards, but I’ve never gone with cash only. I might have to experiment with that. The main reason for me NOT to is I’m a freelancer, so having a paper trail of what I spent money on is better for me for taxes.

Kristin
on January 27, 2015 at 10:09 am

I only use cash on personal spending and nothing business related! It’s definitely a different experience when you only use cash!

I don’t carry cash and I’m sure that if I used this method I would probably spend less. I just hate going to the ATM machine. I can see how spending cash can really make you ponder about spending money while out.

Kristin
on January 28, 2015 at 6:32 am

I find the ATM to be a hassle too and had to force myself to go. I probably could do the cash back option at the store, but I have no idea what the limit back is!

For all the excuses we tell ourselves why we don’t need to spend paper money – as many commenters mentioned above – I see a single important reason that washes them all away: You control spending better with cash than any other payment option. Period.

Example: If we HAD to pay our electric bill with cash then we would likely turn lights off more often and tighten-up our computer’s sleep mode. Seriously. We just do.

Kristin
on September 21, 2015 at 8:21 am

Can you imagine paying the electric bill in cash?! I would be doing the exact same thing as you, ha! I would love to pay more things in cash if it was possible.

My boyfriend and I do cash for our date money and it works really well for us! I set a monthly limit for myself and use my credit card because I get cash back. Then at the end of the month, I pay it all off. It’s helping me to build my credit which I like. But, I totally agree with you on setting a limit on purchases before you go out and being conscious of spending. Without those mindsets I would be in so much debt. What I like about using cash is that it is physical and you can see the money leaving your hand. Don’t quite get that experience with cards. Love using both, and see the benefits and flaws of each for sure.

Kristin
on July 23, 2016 at 10:23 pm

Totally agree Taylor! I like using a CC now because of the rewards and cash back, but it’s still easier for me to use cash to really feel the pain of parting with my money 🙂